The number of mobile customers in Germany amounted to 113.572 million at the end of June 2013, down by 42,000 year-on-year. Mobile service revenues decreased by 3.5 percent year-on-year to EUR 4.82 billion in the second quarter of 2013, due to regulatory cuts to termination rates. The latter contributed to a 9.6 percent drop in voice revenues, while non-voice revenues only rose 4.9 percent.

Mobile connections stable at 113.6 million, Vodafone loses most due to prepaid

The German mobile market consists of four network operators (Telekom Deutschland, Vodafone Germany, O2 Germany and E-Plus), but this is expected to reduce to three pending the completion of Telefonica Germany’s agreed takeover of E-Plus, announced in June 2013. The acquisition still requires regulatory clearance and approval by KPN shareholders. The latter is expected on 2 October, when the Dutch operator will hold an extraordinary meeting of shareholders. While regulatory approval may prove a tough road, the approval by KPN shareholders appears likely after the company agreed a higher price for the deal with Telefonica. This followed pressure from KPN’s largest shareholder America Movil, which was not involved in the original negotiations with Telefonica on the takeover.

In terms of customer numbers, the German mobile market lost 42,000 customers in the 12 months to June 2013, for a total 113.57 million. While there was a strong increase in postpaid numbers, with 2.626 million net additions, this was not enough to offset the loss of 2.669 million prepaid customers. The decrease in prepaid customers was due to Vodafone Germany changing its definition of active lines, leading to a 17 percent annual drop in its prepaid base from 20.195 million in Q2 2012 to 16.734 million in Q2 2013. O2 Germany and Telekom Deutschland reported modest growth of 0.4 percent and 0.9 percent in prepaid lines, and E-Plus saw its prepaid base grow by 3.6 percent.

In postpaid, Vodafone lost 139,000 customers or 0.9 percent compared with a year earlier, while the other operators reported annual growth. Telekom lead the pack with an increase of 10 percent or 1.867 million net additions, followed by O2 Germany with 5.6 percent or 543,000 net additions and E-Plus with 4.6 percent or 355,000. This made Telekom Deutschland the largest MNO in terms of customer numbers with a market share of 33 percent, up by 1.8 percentage points year-on-year. Vodafone lost the top position it held a year ago, dropping from a market share of 31.5 percent to 28.4 percent. E-Plus stayed third with a market share of 21.5 percent, adding 0.8 percentage points year-on-year, and O2 Germany was at 17.1 percent, up by 0.5 percentage points year-on-year.

Figure 1: German mobile connections per MNO (x millions) in Q2 2013 and service revenues per MNO in Q2 2013 (in billions of euros). Sources: company annual reports, Telecompaper estimates.

German mobile service revenues (excluding M2M for O2 and MVNO for Telekom Deutschland and Vodafone) amounted to EUR 4.82 billion in the second quarter of 2013, down by 3.5 percent or EUR 174 million compared with EUR 4.99 billion a year earlier. The decrease was mostly caused by the cut in MTA fees decided by the German network regulator BNA in November 2012. This reduced the termination rate from between EUR 0.0336 and EUR 0.0339 per minute to EUR 0.0185 per minute from 1 December 2012 and to EUR 0.0175 per minute from 1 December 2013. In July 2013, the BNA confirmed the new MTA fees.

The cut in termination rates had a negative effect on voice revenues, which dropped by EUR 277 million or 9.6 percent year-on-year to EUR 2.621 billion in Q2 2013. This was not offset by growth in non-voice services, which rose by EUR 104 million or 4.9 percent to EUR 2.199 billion in the second quarter.

Telekom Deutschland becomes largest MNO in service revenue, passing Vodafone

Excluding the negative MTA effects, Telekom Deutschland was the only operator to report annual growth in service revenue, adding 1.0 percent. E-Plus said that excluding the MTA cuts, its service revenues decreased 2.4 percent year-on-year, hurt by lower prepaid SMS and voice usage. Vodafone saw its underlying service revenues drop 0.5 percent and cited increased price competition as the reason. Telefonica reported underlying revenues (excluding MTA) down 2.5 percent due to slower growth in new Sims as it focused on customer retention and migration to newer tariffs.

Due to the customer losses and revenue drop, Vodafone lost its position as the largest mobile operator in terms of service revenue. In Q2 2013, it had a 33.9 percent share of service revenue, down 0.6 percentage points year-on-year and 1 percent lower versus the first quarter of 2013. Telekom Deutschland ended the second quarter with 34.7 percent of service revenue, gaining 0.9 percentage points year-on-year and 0.2 percentage points in Q2. E-Plus regained the number-three spot with 15.8 percent of service revenues in Q2 2013, after winning 0.7 percentage points during the quarter. O2 fell to fourth place, with a stable market share of 15.5 percent.

The above figures are based on Telecompaper’s database on the German mobile market, which are available for purchase. For more information, click here.

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